Thanks for asking your question! I'm sorry to hear about your tax
issue and I'm going to try my best to help you understand or resolve it.
Basically, if this is a traditional IRA your contributions were made tax free. Therefore, as the IRA is worthless, you will not take withdrawals from it - so you were never taxed and will never be taxed on this money that you invested in the ponzi scheme. You can't take a deduction
for the loss because essentially you would be getting a tax deduction twice - once when you contributed to your IRA and once when it became worthless.
You won't ever take money from the account, if worthless. Therefore there is no tax, and no reason to inform the IRS that the IRA is worthless. Even if you are issued stock, it's completely worthless and you shouldn't have a reportable event.
The only way to take a deduction for worthless IRA securities is if you made your contributions after-tax, for example a Roth IRA
. In that case, you would have a loss. ** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO XXXXX ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid, but the Web site will still collect your payment. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site**